Housing prices proving resilient

AUSTRALIAN capital city house prices rose 0.5 per cent in the June quarter, official data reveals.

Australian capital city house prices rose 0.5 per cent in the June quarter, following a 0.1 per cent fall in the March quarter, the Australian Bureau of Statistics said today.

Economists had expected a fall of 0.7 per cent for the June quarter.

JP Morgan economist Ben Jarman said the house price data was a strong result.

"All in all this report is consistent with our view that house prices are proving fairly resilient and not really declining at any rapid rate," Mr Jarman said.

The last time the Reserve Bank of Australia (RBA) cut its cash rate was in June, by a quarter of a percentage point to 3.5 per cent, following a half a percentage point reduction in May.

Mr Jarman said the rate cuts will help the housing industry into the latter half of 2012.

"We don't think that is going to cause the housing market to catch fire, but it is cushioning and insulating from the downside for sure," he said.

HSBC chief economist Paul Bloxham said the official figures were consistent with the RP Data Rismark July capital city home value data, also released today, which showed capital city home values increasing for the second consecutive month.

"It looks like the housing market has found its bottom," Mr Bloxham said.

"We think with interest rates now below a neutral setting, house prices are likely to stabilise in the second half of this year."